Wednesday, October 09, 2013

Adam Smith on Legitimate State Interventions and Non-Benign Self-interests that Harms Others

I am regularly by correspondents, and sometimes by readers of the Lost Legacy Blog, for details of a) Instances of where Smith advocated State interventions into market transactions, and b) where Smith identifies individuals acting in their own self-interests that imposes harm on other individuals.
These selected examples tend to conflict with some commentators who insist of just casually announce that Smith opposed State interventions, or that he advocated leaving individuals alone to act in their self interests as this would work out for others because even "selfish" actions by individuals are 'corrected' by the "miracle" of markets to produce 'public benefits'.
These views are based on a non-reading of Adam Smith's Works and simple ideological errors, or where they have read Smith's Works and are free from ideological influences they did not read carefully, or have short memories of what they read.
Herewith are two short-lists of instances of Smith's recommended State interventions and his observations of malign self-interests in Wealth Of Nations, Books 1, 2, 3 (there are many more in Books IV and V):

State
interventions in WN:

Here
is a list extracted from Wealth Of Nations:

•
the Navigation Acts, blessed by Smith under the assertion that ‘defence,
however, is of much more importance than opulence’ (WN464);

•
Sterling marks on plate and stamps on linen and woollen cloth (WN138–9);

•
enforcement of contracts by a system of justice (WN720);

•
wages to be paid in money, not goods;

•
regulations of paper money in banking (WN437);

•
obligations to build party walls to prevent the spread of fire (WN324);

•
rights of farmers to send farm produce to the best market (except ‘only in the
most urgent necessity’) (WN539);

•
‘Premiums and other encouragements to advance the linen and woollen industries’
(TMS185);

•
‘Police’, or preservation of the ‘cleanliness of roads, streets, and to prevent
the bad effects of corruption and putrifying substances’;

•
ensuring the ‘cheapness or plenty [of provisions]’ (LJ6; 331);

•
patrols by town guards and fire fighters to watch for hazardous accidents
(LJ331–2);

•
erecting and maintaining certain public works and public institutions intended
to facilitate commerce (roads, bridges, canals and harbours) (WN723);

•
coinage and the mint (WN478; 1724);

•
post office (WN724);

•
regulation of institutions, such as company structures (joint- stock companies,
co-partneries, regulated companies and so on) (WN731–58);